Indian Aviation Sector Remains Under Severe Stress Due To High Costs

Indian Aviation Sector Remains Under Severe Stress Due To High Costs

SpiceJet COO Sanjiv Kapoor, in the Nov 2014 edition of the carrier's in Flight Magazine, commented Nov 2014 that despite all of the growth in the passenger numbers, the Airline industry in India remains under severe stress due to high costs. 

He noted that Aviation fuel costs in India are 40% 60% higher than in other parts of the world. He explained Even as CRUDE OIL prices have fallen by 20% since June this year, the price we pay for Aviation fuel has fallen by only 5%. SpiceJet paid INR3260cr for fuel in fiscal 2014. It is almost 60% of our costs. A 17% reduction would reduce our FY2014 fuel bill of INR3250 cr by INR564cr. A 35% reduction reduces it by INR98cr. ATF prices in India combination of base price and taxes is really hurting Indian Aviation and
challenging the very viability of the sector. Our appeal to the relevant ministries is to please pass on more of the benefit of reduced global oil prices to help make the aviation sector in India healthier. He stressed We are not asking for special discounts or handouts, all we are asking for is ATF prices and taxes closer to what is paid elsewhere in the world, rather than what we have today. He concluded If that can happen, the industry will do the rest and rebound strongly.

CAPA will release its annual India Aviation Outlook on 15-Jul-2014, covering the FINANCIAL year to 31-Mar-2015. It promises to be as interesting and turbulent as ever, with new entrants AirAsia India, Tata-SIA, a new look Jet Airways with Etihad, Air India in Star Alliance and a probable IPO by IndiGo late in 2014.

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Mohini Porwal [ B Sc]
Trainee News Editor
Indian Aviation News Editor